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Three Arrows Capital Failed to pay $350 Million Debt

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Features of the news —

  • Three Arrows Capital, a well-known crypto hedge firm, has missed a payment on debt amounting to more than $670 million.
  • The U.S. dollar-pegged stable coin, USDC, and an additional 15,250 bitcoin, worth roughly $323 million at today’s value, were supposed to be returned. The firm has to return $350 million in debt, according to a notification from digital asset broker Voyager Digital on Monday.

Three Arrows Capital, a well-known crypto hedge firm, has missed a payment on a debt totaling over $670 million. On Monday morning, virtual currency brokerage Voyager Digital published a notification claiming that the fund had defaulted on a $350 million debt.

After days of turbulence in the cryptocurrency market, which saw billions of dollars worth of value disappear, a solvency crisis appeared. Even though the crypto market is still far below its most highs, the price of bitcoin and ether have both recently decreased marginally. The total value of the cryptocurrency market is at $950 billion, falling from its peak of $3 trillion in November 2021. 

Voyager stated that it intended to pursue 3AC restoration (Three Arrows Capital). The brokerage stressed that the system is still in use and can process transactions and orders from customers. That promise is probably an effort to assuage concerns about the larger crypto community contracting the virus. Voyager claimed to hold cryptocurrency substantial assets of over $137 million in cash. The business also mentioned that it has rights to credit for $200 million in cash and USDC as well as borrowing for 15,000 bitcoins valued at $318 million from Alameda Ventures.

Three Arrow Capital hedge fund crisis

Three Arrows Capital crisis
Three Arrows Capital crisis

The financial crisis that Three Arrows Capital is presently experiencing has been made worse by the ongoing downward pressure on bitcoin prices. On Monday, Bitcoin had fallen around 53% so far this year. In the meantime, the U.S. Federal Reserve has hinted at more interest rate increases to rein in spiraling inflation, which has dampened demand for riskier assets. 3AC has participated in several digital asset ventures while borrowing substantial funds from various businesses. This has generated worries about additional repercussions throughout the market.

Ujan Chakraborty
Ujan Chakraborty
Nothing but Blue Skies.
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